Thread by @KShriniwasRao

#Thread – #IPL … The Big Boys’ Club

A note to remember: Not every party that picks the tender doc wants to bid. Many pick it up just to study the doc & understand what the business of cricket is going to be like over the next 5 yrs.

So, don't expect the unexpected. : )

(1/25)

2nd bit: As I've said before, this tender process is not about 'at what price you win'. It's about what 'at price you let go'.

This thread is about the ‘Big Boys’ who’ll participate in the rights tender.

In my last thread, I shared names. This time, we’ll delve deeper.

(2/25)

As you read this, just bear one factor in mind. This whole content game -- from TV & OTT perspective -- is quite a merry-go-round.

To drive content, you need finances; to drive finance, you need subscriptions; to drive subscription, you need content.

Get the point? : )

(3/25)

So, headlines these days say “50,000 cr”. Cool figure. And critics say – that kind of money for hardly a dozen countries that play the sport.

Haha… not actually. Countries that play T20 are far more than “a dozen”. And countries that watch cricket? Well… see this : )

(4/25)

Did you know, cricket has the second largest addressable market in the world, after football? Basketball is BIG, and it comes third. Baseball rules America and it ranks 7th.

Cricket has the 2nd largest fanbase globally & 70% of that is right here, in our country.

(5/25)

We’re talking of 1.8b people. 1/4th of global population. What sells more than cricket in this country? You tell me...

Even general elections here don't churn out the numbers the way cricket does. And mind you, we're talking about the world's largest democracy.

(6/25)

Now, whether that's good or bad -- that we're still such a single sport country, etc -- we'll keep it for another day.

Let's go back to rights sale. We'll look at what's in play. Ppl like a lot of graphics these days. So, here's a gist of the packages once again. 👇😂

(7/25)

Now, coming to the participants… As I said, there are primary players & secondary players.

Primary players – (Pkg A & B)
TV: a) TV18-Viacom; b) Disney; c) Sony
Digital: a) TV18-Viacom; b) Disney; c) Zee; d) Amazon

They are basically the ‘elephants in the room’.

(8/25)

Secondary players – (Pkg C):

This is where, we’ll see a crowd: TV18-Viacom, Disney, Sony, Zee, Amazon, MX Player, Willow, Discovery, Airtel, Vodafone Idea, Fancode, YuppTV, Flipkart, Meta, YouTube, Apple TV, Sky Sports, DAZN, BT Sport, BeIN, Fox Sports, SuperSport, etc.

(9/25)

Pkg C is where we’ll see a crowd. It’s a ‘free-for-all’.

The competition in the VOD segment (subscription video on demand) has gone up phenomenally – also aided by pandemic.

With the rollout of 5G, it’ll crash through the roof. Watch out for this space.

See graphic.

(10/25)

The rise in the VOD segment, and the expected rise moving into 2023, 2024 and further, is phenomenal.

To think that when IPL rights were first sold in 2008, the digital space was just 5% of the overall pie -- is it even believable without the benefit of hindsight?

(11/25)

A quick explanation.

How much will Star earn from present IPL rights cycle?

I don’t have balance sheets but let me take a very calculated guess – their earnings before EBITDA will touch Rs 21,000 cr. I’m all ears if anyone (including Disney) wants to contradict this.

(12/25)

What does the Rs 21k cr figure tell us?

Star paid Rs 54.5 cr per game for 2018-22 cycle.

Now, if we take into account Star made Rs 21,000 cr from their Rs 16,347 cr 5-yr investment – that’s a net of Rs 4,500 cr before taxes.

(13/25)

That means, Star earned back close Rs 65 cr per game (divide the sum by total number of matches – 314)

The base price is approx. Rs 35 cr higher than that.

The base price is where the bidding will begin from. Sounds mighty?

Ground realities are mighty enough too.

(14/25)

India's media consumption habits have changed rapidly and the speed is just multiplying.

Average hike in consumption of content on TV vis-a-vis OTT, increase in average consumption time & willingness to spend on services has seen a healthy growth.

Numbers don't lie.

(15/25)

There are more numbers.

There’s been a min 20% hike in IPL viewing over last 2 yrs. It went from 462m to 665m, registering around 400b viewing mins & 12% growth in avg time spent per game.

Volume generated is right up there, after EPL and the NFL -- market leaders.

(16/25)

The phenomenal consumption numbers tell heavily on why broadcast industry is gunning for this pie.

After EPL -- which sells rights for 3 years -- only IPL sells right for in the narrowest window -- 5 years (bundled, of course).

It's quite a statement from a 15-yr-old.

(17/25)

With such phenomenal numbers, rapid tech growth, 5G rollout, e-retail getting into a far more competitive space & e-commerce, e-education & e-sports taking over our lives -- we know cricket is not just a sport where business is concerned.

It's India's ultimate catalyst.

(18/25)

This massive reach allows participants in the bidding process to use IPL not just for the incentivized product that it has become but as a medium that helps engage.

You, your parents, wife, sister, children, grandparents, grandchildren, your dog -- are all consumers.

(19/25)

I've said this before & I'll say it again.

Until now, how did this space work? The broadcaster paid BCCI huge sums to buy rights for cricket, went to the consumer & said: "Pay me 100 Rs per month and watch cricket".

That model is set to undergo a massive change.

(20/25)

Now, the broadcaster will pay huge sums to buy cricket rights and might come to you in a couple of years and say: "Keep your 100 Rs. I don't want it. Watch the cricket for free. Just buy my 5G data, TV/fridge on e-retail. Buy your child my e-education course etc etc.

(21/25)

And in this changing game...

* TV18-Viacom with a bouquet of related businesses.
* Disney, as the world's biggest content player.
* Amazon -- with two highly successful verticals: Retail & Prime.
* Sony with very deep pockets.

... are the frontrunners.

(22/25)

All have more or less same spending capacity in their respective spaces -- be it TV or digital or both.

And that's why what I said in the 2nd tweet of this thread is important: "At what price you buy is secondary. At what price you let go is primary & most important".

(23/25)

Each powerhouse has a different business model. Selling cricket -- merely as content -- is just a byproduct of this model.

For us consumers, cricket is the high-point.

Reliance might think Rs 50k cr is spend-worthy because they'll recover it thru 5G & retail.

(24/25)

Disney might think differently & so will Amazon or Sony.

The moment the bid goes past a certain figure that doesn't help them see their 'bigger picture' (read: related businesses) -- they'll move away.

Beauty, my friends, will lie in the eye of the beholder.

(Ends)

Will do a separate thread on Pkg C. It requires a lot of details to be shared.

A very senior sports industry executive pointed out a correction.

Tweet 17/25... for the number of matches MLB hosts every season, rights fee per game is much lower.

(In fact when we speak of per-match fee, this is an angle we must look at. IPL hosts just 74 games / season).